Critical Survey: Allianz (AZSEY) and Arthur J. Gallagher & Co. (AJG)

Allianz (OTCMKTS: AZSEY) and Arthur J. Gallagher & Co. (NYSE:AJG) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Dividends

Allianz pays an annual dividend of $0.70 per share and has a dividend yield of 3.1%. Arthur J. Gallagher & Co. pays an annual dividend of $1.64 per share and has a dividend yield of 2.4%. Allianz pays out 40.7% of its earnings in the form of a dividend. Arthur J. Gallagher & Co. pays out 53.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Arthur J. Gallagher & Co. has increased its dividend for 7 consecutive years. Allianz is clearly the better dividend stock, given its higher yield and lower payout ratio.



Profitability

This table compares Allianz and Arthur J. Gallagher & Co.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allianz 5.72% 10.35% 0.80%
Arthur J. Gallagher & Co. 10.34% 18.19% 5.63%

Institutional & Insider Ownership

0.2% of Allianz shares are held by institutional investors. Comparatively, 83.4% of Arthur J. Gallagher & Co. shares are held by institutional investors. 1.6% of Arthur J. Gallagher & Co. shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Allianz has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, Arthur J. Gallagher & Co. has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Valuation & Earnings

This table compares Allianz and Arthur J. Gallagher & Co.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Allianz $123.78 billion 0.80 $7.69 billion $1.72 13.07
Arthur J. Gallagher & Co. $6.16 billion 2.00 $463.10 million $3.06 22.07

Allianz has higher revenue and earnings than Arthur J. Gallagher & Co.. Allianz is trading at a lower price-to-earnings ratio than Arthur J. Gallagher & Co., indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Allianz and Arthur J. Gallagher & Co., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allianz 0 6 2 0 2.25
Arthur J. Gallagher & Co. 0 4 6 0 2.60

Arthur J. Gallagher & Co. has a consensus target price of $72.33, suggesting a potential upside of 7.11%. Given Arthur J. Gallagher & Co.’s stronger consensus rating and higher possible upside, analysts clearly believe Arthur J. Gallagher & Co. is more favorable than Allianz.

Summary

Arthur J. Gallagher & Co. beats Allianz on 12 of the 17 factors compared between the two stocks.

Allianz Company Profile

Allianz SE, together with its subsidiaries, provides property-casualty insurance, life/health insurance, and asset management products and services worldwide. The company's Property-Casualty segment offers various insurance products, including motor liability and own damage, accident, general liability, fire and property, legal expense, credit, and travel insurance products to private and corporate customers. Its Life/Health segment provides a range of life and health insurance products on an individual and a group basis, such as annuities, endowment and term insurance, and unit-linked and investment-oriented products, as well as private health, supplemental health, and long-term care insurance products. The company's Asset Management segment offers institutional and retail asset management products and services to third-party investors comprising equity and fixed income funds, as well as alternative products; and investment management services. Its Corporate and Other segment provides various banking products for corporate and retail clients; and alternative investment management services in the private equity, real estate, renewable energy, and infrastructure sectors. Allianz SE was founded in 1890 and is headquartered in Munich, Germany.

Arthur J. Gallagher & Co. Company Profile

Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, and third party claims settlement and administration services to entities in the United States and internationally. Its Brokerage segment consists of retail and wholesale insurance brokerage operations. This segment offers retail brokerage services, which negotiate and place property/casualty, employer-provided health and welfare insurance, and retirement solutions primarily for middle-market commercial, industrial, public entity, religious, and not-for-profit entities. It also provides consulting, management, and administrative services. This segment's wholesale brokerage operations assist brokers and agents in the placement of specialized and hard-to-place insurance programs. It also acts as a brokerage wholesaler, and managing general agent or managing general underwriter distributing specialized insurance coverage's for underwriting enterprises; and performs activities, including marketing, underwriting, issuing policies, collecting premiums, appointing and supervising other agents, paying claims, and negotiating reinsurance. The company's Risk Management segment offers contract claim settlement, claim administration, loss control, and risk management consulting services for commercial, not-for-profit, and captive and public entities, as well as various other organizations that choose to self-insure their property/casualty coverage's; and for underwriting enterprises, which choose to outsource their property/casualty claims departments. This segment also offers integrated disability management programs, as well as information, risk control consulting, and appraisal services. The company offers its services through a network of correspondent insurance brokers and consultants. Arthur J. Gallagher & Co. was founded in 1927 and is headquartered in Rolling Meadows, Illinois.

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